In an economic expansion, people used their credit cards to purchase many goods. But now the economy is in recession, people must use much of their reduced incomes to pay back debts. If employees manufacturing the goods people used to buy are laid off, they will suffer from:

Question

Quizplus · Accepted Answer

The situation described in the question is an example of cyclical unemployment, which occurs due to fluctuations in the business cycle. In an economic expansion, businesses are growing, and there is an increased demand for goods and services, leading to job creation. But in a recession, the opposite occurs, and businesses lay off employees as demand decreases. The laid off employees in this situation are experiencing cyclical unemployment because it is due to the economic downturn and will likely resolve as the economy recovers.

In an Economic Expansion, People Used Their Credit Cards to Purchase